The 'market' for contingent protection

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International Review of Applied Economics


Anti-dumping and countervailing duty law and policy has, for several decades, been one of the most contentious issues affecting trading relations between members of the World Trade Organization. A major concern among researchers and policymakers is that the decision-making process of regulatory authorities responsible for the administration of anti-dumping and countervailing duty (AD/CVD) laws is biased in favour of providing protectionist outcomes for national applicant firms and industries. In this paper a new, broader approach for testing empirically AD/CVD outcome decisions is advocated that analyses the provision of contingent protection as the outcome of a quasi-market process involving supply and demand behaviour played out in a quasi-market context susceptible to market failure. This approach provides, arguably, a fairer test of AD/CVD outcomes. Using data from Australia, historically a heavy user of AD/CVD laws and policy, the paper finds support for the hypothesis that regulatory process bias including administrative and statutory biases, are important explanators of AD/CVD outcomes. Moreover the findings of this paper suggest that failure to include variables capturing these effects in other studies that have modelled empirically AD/CVD outcomes may have led to missing variable bias and false conclusions. © 2004 Taylor and Francis Ltd.

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